About the same time as the American banks had closed their doors to the public after a hectic day, Dr. Walter Hofer was finishing his coffee in his home, high above the Lake of Zurich. The first snow of the year was just starting to fall outside, and his wife had decided to light the fireplace to mark the occasion.
“What’s Mary all excited about?” he asked his wife.
“She’s got a date. Her first in Switzerland. With a young man from the bank, I forget his name.”
“Where’s her mother?”
“Walter, it’s not her mother, in that tone of voice. She’s my sister.”
“Well, I prefer to think of her as Mary’s mother, if you don’t mind. That super-American act of hers gets on my nerves every time she shows up here. She was born and raised right in Brugg just like you. Why in the world we have to speak English with her is beyond me.”
“Now, Walter. Thirty years in America is a long time. And you have to admit, she has done a very nice job in bringing up Mary.”
“Fine. Then where’s your sister?”
“She went to the theatre.”
The doorbell rang and Mrs. Hofer immediately rose. A minute later she returned with the young man. It was Zimmerer of the foreign exchange desk, scrubbed a healthy Swiss pink and embarrassed as hell.
“Walter, won’t you look after Mr. Zimmerer for a moment. I want to go up and tell Mary he’s here.”
It was not exactly Hofer’s style to entertain department heads of the bank in his living room, but he accepted the challenge fairly gracefully. Zimmerer turned down his offer of coffee but gratefully accepted a cognac.
“Well, well, Herr Zimmerer. Apparently my niece and you have found a common interest in foreign exchange.”
Zimmerer grunted something rather inaudible and took another slug of cognac. Hofer continued, “Actually, it’s very good that you dropped by. I hear that all hell broke loose in New York during the past couple of hours.”
“Yes, sir. The rumours that the dollar is under steady attack from Eastern Europe seem to be proving out. Now everybody’s getting into the act. I’m not sure how long the Americans can hold the dollar. Apparently, they have been massively intervening in the market all day in New York, but if the selling keeps up, it’s hard to say what will happen.”
“What do you think?”
“I really don’t know. I can say, however, that the bank’s in good shape. On balance, we are now about $2 billion short, just as you instructed, sir. But I’m afraid that we could not fill all the orders for some of our customers with the same idea. The markets were simply too hectic, and some of our major partner banks have simply stopped trading for the moment.”
“Is the word out that we’ve been selling a lot of dollars?”
“I’m afraid it is, sir. You know how these things work. When four or five banks keep getting selling orders from us, in time their traders start talking to each other. Very gossipy bunch, you know.”
“Fine, Zimmerer. Now until I say differently, I want you to stay right on the fence from now on. No more selling of dollars. But also no buying. Just keep trading within very very narrow margins. Come to think of it, if necessary buy more dollars than you sell tomorrow morning. And make sure everybody notices it.” He paused. “Now tell me about gold.”
“Well, Kellermann insisted we start executing those buy orders for that numbered account. And at the same time, the fellows across the street also came into the afternoon fixing with a very big purchase. The result was inevitable. The price had to be pushed up over $4 an ounce, unless somebody wanted to intervene.”
“And tomorrow?”
“It can only go higher. Much higher.”
“Well, I don’t want it to go higher. I want you to use the bank’s own gold stocks to meet every buy order tomorrow. I want the price to be kept below $80 an ounce. I’m holding you personally responsible for this.”
“Yes sir, I’ll be at the gold fixing meetings myself in that case. But although we can control the Zurich market, at least for a day or two, I’m afraid that there’s little we can do in London.”
“Let me worry about that, Zimmerer. You just carry out your instructions here.”
At this point, Hofer’s niece appeared. In contrast to her mother she thought Switzerland was just great. She had donned a white lace blouse and the type of dirndl so popular in the Alpine countries. Hofer, who had no children of his own, liked the young lady immensely and went out of his way to compliment her on how nice she looked. He escorted her and the young man to the door and even lingered a moment, watching them descend the stairs to the car parked below, chattering together.
“Walter,” called his wife, “please come back in. You’ll catch cold standing out there.”
Soon he had returned to his usual chair near the fireplace.
“Troubles?” said Martha.
Hofer did not even glance up. He was gazing into the fire.
“Walter!”
“Yes, Martha. What is it?”
“I just asked you if you have troubles. You’ve been about ten kilometres away ever since you came home this evening.”
No reply.
“Now, you know it’s always better to get things off your chest. Otherwise you just sink deeper and deeper into yourself, and soon all we will be doing is grunting at each other.”
“You’re right, Martha. It’s not so pleasant at the moment. The same old story. You do X, and the next year everybody expects you to do X plus one. And the year after, plus two. And so forth. One has to run faster and faster just to maintain the appearance of infallibility, of never making a mistake. Every year, deposits must grow 15 percent, profits 20 percent, bad loans zero percent. At this point, just one slight stumble and the word will be out that Hofer is over the hill. It’s not always so easy.”
“Why don’t you think slowly about giving it up then? There’s really nothing much more that you can hope to add to that which you’ve already done. You know that you get very little thanks for all you do anyway. Why go on and on and on, until something happens?”
“Not yet. Maybe in two or three years. But not now.”
“Why not?”
“Martha, you know that I never like to go into details about the bank. But still, I’ll try to explain very generally. Due to this craze for growth and for profits during the past ten years, we’ve been slowly building up a group of loans that we should have been writing off the books but didn’t. It wouldn’t have looked good. The competition would have laughed themselves sick. Not that they don’t have the same problem. But try to prove it. Now we are faced with three new loans that must join the crowd. It’s no real problem, when you consider our overall picture. None. But if we wiped that whole slate clean, it would also nearly wipe out our profits for a year. Maybe two. Then everything would be shipshape again for the next ten years.”
“Well, if it’s got to be done, I would not worry about those fools who have been envious of you for God knows how long. You always have the last laugh, Walter.”
“It’s not that easy. If I did it that way, the shareholders would be yelling for a younger man immediately. I know those birds. No, I’ve got to work it out during the time I’ve got left.”
“Now Walter, you’re not exactly eighty, you know.”
“Still, I want that place perfectly clean before I leave. I don’t want anybody moving into my chair who would whisper around town about the mess he inherited from old Hofer. Oh, no! But don’t worry, I have something in the works that may solve the problem right away. What bothers me is that the thing I was betting on most might be blowing up in my face.”